India July inflation accelerates to 4.45%, unlikely to alter RBI rate outlook

Business Recorder reported that India's annual retail inflation rose to 4.45% in July, up from 4.38% a month earlier, driven by higher food prices. The reading was close to a Reuters poll of economists, which had projected 4.50%. It marked the second straight month that inflation stayed above the Reserve Bank of India's 4% medium-term target.

The central bank kept its benchmark repo rate at 5.25% last week while it waited for clearer signs on whether price pressures had spread widely across the economy. RBI Governor Sanjay Malhotra said headline inflation had moved above target mainly because of fuel prices, while broader pressures stayed in check at the last policy review. The bank also lowered its 2026/27 inflation forecast by 10 basis points to 5%.

Food inflation climbed to 5.52% in July from 5.32% in June, linked to weak monsoon rains, and is expected to ease if August rainfall recovers slightly. Transport inflation also edged up to 4.43% from 4.31%. Economists said that because domestic retail fuel prices have not been meaningfully revised, the effect of volatile crude prices on consumers is likely to stay limited.